Operational Challenges at Best Buy Corporation

Introduction 

This research paper reports the relationship between the managerial operations of Best Buy Corporation and its productivity over the past ten years. The focus of the essay on Best Buy Corporation is useful since it provides a critical means of analyzing the importance of proper managerial practices on the improvement and sustainability of productivity. Specifically, Best Buy operates in the retail industry that has been offering electronic products to consumers since 1966 (Best Buy Corporation, 2018). 

Background to the Problem 

While Best Buy is one of the most reputed companies in the retail industry, it has a history of struggling management practices that saw the institution realize a flat revenue turnover of $50 billion and a declining growth of 7% annually (Haddi et al., n.d). It is also established that the company realized a decline in its earnings per share by over 200% in 2011. Resultantly, the organization pulled out of the UK in addition to removing the chair of the board and its founder in 2012 (Haddi et al., n.d). The business further closed many other stores, reshuffled its management, and did other desperate things to deal with the issue of governance. Of the biggest significance to this study is the fact that managerial problems resulted in the problems of the company over the period mentioned. Therefore, it is imperative studying the connection between management practices and the performance of companies. 

Problem Statement 

According to Yukl (2008), effective management during times of crisis is important for economic recovery after the crisis. In this case, management has a specific role in strategic planning, which helps to deal with issues before, during, and after they happen. However, in the event of managerial ineffectiveness, companies are unable to deal with crises that could affect the productivity of their businesses. The specific problem that this research addresses is that the management practices of Best Buy Corporation could have contributed to its declined business activity. Therefore, the focus of this research is to examine the relationship between strategic management practices and the endurance of organizations during crises. 

Purpose Statement 

The purpose of this mixed methods study is to examine the contribution of the managerial problems at Best Buy Corporation to the reported problems of declined financial performance. The research studies what factors contributed to the managerial issues and why the company struggled on the financial front during the period covered by the study. 

Nature of the Study 

This research project adopts the mixed methods research method. The rationale for this approach is the fact the fact that it combines the qualitative and quantitative methods of research, therefore, avoiding the methodological biases that connect to each of the individual methods of research (). The method also allows for a deeper analysis of data to deduce more reasoned conclusions than when each of the two approaches is used separately. The study also adopts the case study design, which deals with a deep analysis of data from one company. In this case, the fact that the study focuses on Best Buy Corporation indicates the need to collect as much data from the organization as possible. 

Research Questions 

What factors have contributed to the operational ineffectiveness at Best Buy Corporation over the last decade? 

What was the relationship between the operational ineffectiveness experienced at Best Buy and its financial performance? Why did such a relationship emerge in the operations of the company? 

Research Hypothesis 

The research problem identified in this study notes a connection between managerial inefficiencies and a struggling financial performance. Therefore, it is hypothesized that the management of the company failed to manage a section of its employees, which caused them to leave for opportunities elsewhere and resulted in an overall financial struggle. 

Theoretical Framework 

The research adopts the flexible leadership theory, which described the manner in which top organizational executives as well as other leaders can affect the financial performances of their organizations. According to this theory, three fundamental determinants of the organizational financial performance are human capital, adaption, and efficiency (Yukl, 2008). The model also holds that a wide range of behaviors of leadership external initiatives, structural forms, and management practices could be used in influencing such performance determinants. Therefore, the flexible leadership model could be useful in explaining the situation at Best Buy Corporation during the studied time. 

Review of Literature 

There has been growing interest in the strategic leadership sphere over the recent years (Yukl, 2008). Among the most significant questions of research has been on the manner in which corporate executives influence the financial performances and survival of their organizations. Therefore, academicians on several separate subfields, which include human resource management, strategic management, leadership, and organizational change, have done relevant research (Boal & Hooijberg, 2000). Most of the leadership literature offers only limited insights concerning strategic leadership. In specificity, most of the empirical studies that have been conducted in the last half of the century involve lower or middle-level managers than top executives (Cannella & Monroe, 2007). The fundamental research questions concerned determining how individual leaders could influence followers to work better and more than they had expected initially. In such cases, the focus was on the leadership theories of charismatic and transformational leadership (Osborn, Hunt, & Jauch, 2002). Evidence from such studies indicates that transformational leadership has the capacity to enhance subordinate performance and motivation (Yammarino, 2000). However, the leadership theories studied is to narrowly focused to describe the manner in which top executives affect the financial performances of large institutions (Conger & Kanungo, 1998). In this case, most successful institutions not to have chief executive officers that are considered charismatic and visionary managers do not guarantee the avoidance of financial disaster (Cannella & Monroe, 2007). 

Studies organizational change, human resource management, and strategic management give additional insights concerning the effect of top executives on the performance of their firms. The studies, for example, find that chief executive officers can have the ability to moderate the levels of influence on the financial performances of their institutions (Boal & Hooijberg, 2000). It should also be noted that studies on executive discrete identify situational constraints, which limit the influence of the chief executive officers on the performances of their firms (Yukl, 2008). Therefore, extant literature seems to suggest that top management individuals have a bearing on the levels of their organizational financial performance. 

Definition of Terms 

Strategic Leadership 

The capacity of leaders to influence others into making decisions that promote the prospects of a firm’s long-term success while sustaining long-term financial wellbeing 

Flexible Leadership Theory 

A theory of management that suggests the need for leaders to adapt their plans to the realities of their workplace situation 

Transformational Leadership 

A type of leadership style in which the leaders focus on the improvement of the capacities of their followers to deal with situations and promoting an inclusion of the followers in decision-making 

Charismatic Leadership 

A type of leadership style in which the leaders motivate and inspire he followers to work at the highest levels as well as to show significant commitment to the objectives of their organizations 

Human Capital 

Refers to all the types of resources in an organization related to labor and employees 

Assumptions 

The research assumes that Best Buy Corporation did not have effective managerial frameworks to support the adoption to its current situation that saw its financial performance greatly compromised. The study also assumes that the leaders did not use any between charismatic and transformational leadership styles. 

Limitations of the Study 

The current research’s adoption of the mixed methods of research presents the most significant challenge that is common for its usage. Specially, the researcher’s relative inexperience the method makes it difficult to achieve an in-depth analysis of the data collected. 

Delimitations 

Because of the researcher’s limitation in the methodology, the study does not collect the qualitative and quantitative data separately. Instead, the data is collected simultaneously, before the analysis is done separately. 

Role of the Researcher 

The primary role of the researcher was to develop the tools of data collection as well as to ensure an adherence to the ethical framework of researching using human samples. Specifically, the researcher developed the questionnaires for data collection, designed the consent forms, paid for their postage to the specific respondents, and analyzed the collected data. 

Research Design 

The study adopts a mixed methods approach to research, using the case study design to collect data from Best Buy Corporation. In this case, quantitative data is collected from the financial records of the company found from its corporate website and related electronic sources. Additionally, the qualitative data is collected using questionnaires that study the likely managerial practices that existed prior and during the crisis identified in the problem and background statement. 

Population and Sampling 

The research collects data from 200 employees and former employees of Best Buy Corporation using a questionnaire designed. The researcher sent 300 questionnaires to the probable respondents out of which 270 were returned. The researcher then used the random sampling method to recruit the 200 respondents that were then recruited for the study. The choice of the random sampling technique ensured that each of the respondents had an equal chance of being used in the study (Liu, Sadygov, & Yates, 2002). 

The Instrument and Technique of Data Collection 

The questionnaire acted as both the instrument and technique of collection of data. In this case, the questionnaire was designed according to the scope of the study questions in which the respondents were expected to respond to the managerial conditions before and during the reported crisis at their institution. 

Reliability and Validity of the Questionnaire 

The researcher conducted a representational analysis to determine the reliability and validity of the research questionnaire. Specifically, a separate team of experts was contacted for this phase of the preparation of the questionnaire (Cade et al., 2002). The panel of experts contacted for this process explored the theoretical construct as indicated in figure 1. This type of validity explored the manner in which the theoretical construct is given in an operational sense. 

Figure 1 : determination of the validity and reliability of the questionnaire 

Presentation of the Findings 

Quantitative Data 

Quantitative data used in the study was collected from financial databases and concerned the financial wellbeing of the company for the period covered by the study. Table 1 below indicates the financial information of the company. 

Table 1 : qualitative data concerning the financial performance of Best Buy from 2007 to 2017 

It is notable that the company has experienced a period of financial stagnation and decline, especially between 2011 and 2017, which is indicated in figure 2 below. 

Figure 2 : the financial performance of Best Buy analyzed using a chart 

Figure 3 : the net income and earnings per share statistics for Best Buy Corporation from 2007 to 2017. 

Figure 3 indicates no perceived changes in the earnings per share of the company, which is why figure 4 below presents a separate summary of the statistics. 

Overall, it is established that the company struggled financially during the study period. therefore, it was necessary to establish the causes of the struggle as presented using the qualitative data collected using questionnaires as described earlier. 

Qualitative Data 

The questions required the respondents to report on the manner of the management of clients by the company before and during the financial crisis deduced from the findings above. The qualitative data from the questionnaires indicates that even while the firm appeared to discern a top-to-bottom system of management, the sales agents were not empowered fully to deal with clients without much interference from the senior management. In fact, after the management had realized the apparent financial struggle, the approach to resolving the issue did not focus on an immediate remedy, rather; the executive management resorted to closing down some branches and pulling out of some markets, especially the UK. As one responded indicated, “…the CEO had grown desperate because he wanted to establish and immediate remedy to the situation. Therefore, he thought retrenching and pulling out of places such as the UK would have been quite appropriate. I was not laid off, but several of former staff mates were dismissed without pay.” The respondents also indicated that the scenario only worsened after the move to move out of some markets and to fire extra staff was reached. 

It is clear that the management had envisioned increasing costs of operation as the probable causes to the problem. However, since the situation did not improve even with immediate measure, the management was the issue. According to the flexible management theory, the management had not realized the need to adapt its strategies to the changing conditions. For instance, laying off workers reduced the amount of human capital endowment that the firm had been enjoying in periods of relative financial stability. It also appears that the management failed to motivate employees to improve their performance. Therefore, the operational effectiveness of the company was compromised, which caused the occurrence of problem that the firm has been struggling with as indicated in the data within the quantitative section. 

Recommendations for Action 

Best Buy Corporation should first consider the managerial issue through establishing strategic management approaches. In this case, the firm’s management should adopt the flexible management system, which adjusts plans according to situations. The firm should also leverage the existing resources for the pursuance of opportunities in affiliate marketing, virtual sales, and cloud computing. The online model that the company uses would be an effective way of reducing the costs of operations as opposed to reducing its human capital since human resources are sources of competitive advantage for modern organizations (). 

Recommendations for Future Studies 

The current study only focused on the relationship between managerial effectiveness and financial performance of a single company. Therefore, future studies should focus on multi-industrial elements of management to ascertain the truthfulness of the findings in this research. 

Summary and Study Conclusions 

This research paper concerned the relationship between the managerial operations of Best Buy Corporation and its productivity over the past ten years. The focus of the essay was on Best Buy Corporation and was useful since it provided a critical means of analyzing the importance of proper managerial practices on the improvement and sustainability of productivity. The study adopted a mixed methods approach to study in which qualitative data focusing on the contribution of the executive management of Best Buy Corporation to its financial struggle was collected using questionnaires and quantitative data was collected from the corporate website of the company. The research has found that the management failed to adopt strategic management strategies during crisis. Therefore, it has been recommended that the company adopts strategic management strategies as explained by the flexible management theory. 

References 

Best Buy Corporation (2018). About Best Buy - Best Buy Corporate News and Information . Retrieved 27 January 2018, from https://corporate.bestbuy.com/about-best-buy/ 

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Cannella Jr, A. A., & Monroe, M. J. (2007). Contrasting perspectives on strategic leaders: Toward a more realistic view of top managers.  Journal of Management ,  23 (3), 213-237. 

Conger, J. A., & Kanungo, R. N. (1998).  Charismatic leadership in organizations . Sage Publications. 

Haddi, K., Fitzsimmons, A., Hussein, H., & Marotske J. (n.d). Best Buy Corporation: Strategic Management Analysis. Retrieved January 27, 2018 from https://www.academia.edu/2377926/Best_Buy_Corporation_Strategic_Management_Analysis 

Liu, H., Sadygov, R. G., & Yates, J. R. (2004). A model for random sampling and estimation of relative protein abundance in shotgun proteomics.  Analytical chemistry ,  76 (14), 4193-4201. 

Morning Star (2018). Growth, Profitability, and Financial Ratios for Best Buy Co Inc (BBY). Retrieved 27 January 2018, from http://financials.morningstar.com/ratios/r.html?t=BBY&region=usa&culture=en-US 

Osborn, R. N., Hunt, J. G., & Jauch, L. R. (2002). Toward a contextual theory of leadership.  The Leadership Quarterly ,  13 (6), 797-837. 

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Yukl, G. (2008). How leaders influence organizational effectiveness.  The leadership quarterly ,  19 (6), 708-722.